RESERVE Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has explained the use of US dollars in the country, including value and legal status of the virtual form of the greenback.
This comes as the central bank has engaged banking institutions to ensure there are no gridlocks in the settlement and clearing of all foreign currency transactions in the country. Dr Mangudya told delegates at the Zimbabwe National Chamber of Commerce (ZNCC) conference last week that the apex bank and the Bankers Association of Zimbabwe (BAZ) were seized with the matter.
Zimbabwe adopted a US dollar dominated multicurrency regime in February 2009 to ensure stability when hyperinflation ravaged the local currency, rendering it worthless after inflation peaked at 231 million in July 2008. Dr Mangudya said there was about US$150 million of the virtual US dollars, which represent the residual on the domestic US dollar settlement platform established during the dollarisation era.
“This virtual US dollars at the bank represent the residual forex balances that were in the system when we crossed over from the 100 percent dollarisation era in February 2019,” he said
There have been some delays in settlement and clearing of transactions on virtual US dollars, mischievously termed “local US dollars in certain quarters”, over incorrect assumptions of their true status.
Dr Mangudya also said he was assured by the US embassy in Harare that US dollar notes do not expire while torn notes with at least half their material and old series notes can be exchanged for their full value.
The Governor said there was no difference between the US dollars and its virtual form, adding settlement of bank transactions is an activity for back office staff, which should not inconvenience customers.
The domestic US dollar settlement platform was established by the central bank with the full consent of the then Finance and Economic Development Minister Tendai Biti (2009-2013. Instructively, it was inefficient for local US dollar payments to be cleared on the international gateway first while Government accounts did not have enough funds to meet state obligations.
Dr Mangudya said given scrutiny on international payments, initiating payments locally and having them cleared on the international settlement platform and back would raise suspicion.
He also clarified that the US$1,1 billion in the nostro accounts and the physical US dollars in the bank exclude the nearly US$150 million of the virtual US dollars in the local bank accounts.